MORS Software 2012 Liquidity Risk Management survey was conducted between 4 May and 15 July 2012. Sixty-one banking professionals from 26 countries across the UK, Continental Europe, Asia, Middle East and the US participated.
The survey reveals that:
The majority of banks prioritise intra-day liquidity risk monitoring; over two-thirds of the banks are already monitoring liquidity risk in intra-day.
Data gathering from many different sources remains a major challenge for most banks: on average, banks collect liquidity risk monitoring data from three different systems. The growing number of banks using front office systems data implies an increasing interest for getting as much information in real-time as possible.
Most banks are still unable to monitor the entire bank in intra-day: only one third of banks are able to monitor consolidated bank-level risk figures in intra-day, which is the standard targeted by regulators.
Intra-day follow-up of nostro and central bank balances and the ability to monitor liquidity risk figures intra-day are prioritised areas within liquidity risk monitoring activities.
Intra-day liquidity risk monitoring projects are still far from complete for most banks: only 13% of banks have finalised their intra-day liquidity risk monitoring project, while a greater number of banks have now determined their plan compared to last year.
Business benefits are still the main drivers for intra-day liquidity risk monitoring; however, the importance of regulatory requirements has increased from last year. Efficient use of liquidity and reduction of associated costs were regarded as the most important benefits of intra-day liquidity monitoring. The increased focus on complying with regulatory requirements reflects the upcoming Basel III deadlines.
Mika Mustakallio, CEO, MORS Software said: “Interest in intra-day liquidity risk monitoring has increased steadily over the past 12 months. Continuously challenging market conditions drive banks to optimise their use of liquidity and capital, and, at the same time banks are feeling pressure to achieve regulatory compliance. Best practice intra-day liquidity risk monitoring solutions such as MORS help banks meet both needs”.